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Champerty and Maintenance

. Frank v. Legate

In Frank v. Legate, 2015 ONCA 631 (CanLII) (Ont CA, 2015) the Court of Appeal stated as follows on tort of champerty and maintenance:
[64] In McIntyre Estate v. Ontario (Attorney General) (2002), 2002 CanLII 45046 (ON CA), 61 O.R. (3d) 257 (C.A.), O’Connor A.C.J.O. noted, at para. 25, that the torts of champerty and maintenance continue to be actionable upon proof of special damage. Associate Chief Justice O’Connor undertook a thorough review of the development of these torts in Canada and England. He discerned four general principles from this review of the common law, at para. 34:
− Champerty is a subspecies of maintenance. Without maintenance, there can be no champerty.

− For there to be maintenance, the person allegedly maintaining an action or proceeding must have an improper motive, which motive may include, but is not limited to, officious intermeddling or stirring up strife. There can be no maintenance if the alleged maintainer has a justifying motive or excuse.

− The type of conduct that has been found to constitute champerty and maintenance has evolved over time so as to keep in step with the fundamental aim of protecting the administration of justice from abuse.

− When the courts have had regard to statutes such as the Champerty Act and the Statute Concerning Conspirators, they have not interpreted those statutes as cutting down or restricting the elements that were otherwise considered necessary to establish champerty and maintenance at common law.

[68] First, it is not possible to make a claim for champerty, which requires the maintainer to share in the profits of the litigation, with respect to complaints made to the College. Damages cannot be awarded in those proceedings. Consequently, there are no profits to share. I am also aware of no case law, and the appellant has not provided the court with any, where a maintenance claim has been made regarding complaints to a regulatory body.

[69] Second, I also agree with the submission of the respondents that the claim was premature, since none of the underlying actions or complaints had been concluded at the time the claim was issued.

[70] Other than a passing reference in Lorch v. McHale (2008), 2008 CanLII 35685 (ON SC), 92 O.R. (3d) 305 (S.C.), at para. 34, aff’d 2009 ONCA 161 (CanLII), there is no Ontario case law that addresses the issue of whether a claim for champerty and maintenance can be asserted prior to the conclusion of the underlying action.

[71] In Oldford v. Canadian Broadcasting Corp., 2004 NSSC 105 (CanLII), 223 N.S.R. (2d) 380, Coughlan J. dealt with the issue squarely. He concluded that a claim for maintenance is not actionable without proof of actual loss. Actual loss will not be incurred if the maintainer is successful in the underlying action. On that basis, he struck a claim for champerty and maintenance regarding an underlying claim that had not been concluded.

[72] Justice Coughlan thoroughly reviewed the English authorities that address this point. He placed considerable reliance on the reasoning of Lord Shaw and Lord Phillimore in Neville v. London Newspapers Ltd., [1919] A.C. 368 (H.L.). While Coughlan J. recognized that the two majority decisions in Neville were divided on the issue of whether unsuccessful litigants can later make a claim for champerty and maintenance, he ultimately concluded that they could not.

[73] I agree with Coughlan J.’s analysis on this issue. There can be no champerty or maintenance if the maintainer has a justifying motive or excuse. As stated by Lord Phillimore in Neville, at p. 433, “the justification or excuse is to be found in the righteousness of the suit and the proof of its righteousness is its success.” It follows that the lawfulness of a defendant’s position in maintaining litigation can only be determined once the litigation has concluded.

[74] As noted in McIntyre at para. 47, the public policy animating the law of champerty and maintenance has always been to protect the administration of justice from abuse. In those instances where our judicial system is being abused, it is only fair that the aggrieved party is entitled to compensation. But where the underlying action or defence is a valid and legitimate use of the court system, there can be no damages based on these causes of action.

[75] An action for champerty and maintenance that precedes the conclusion of the underlying action puts the cart squarely before the horse. Moreover, the premature use of these torts is abusive to the administration of justice because it serves to obstruct the prosecution of legitimate claims and defeat the assertion of valid defences. This, of course, is contrary to the public policy rationale for these torts.


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